Jumbo Loans in Salt Lake City’s Competitive Market: How to Secure Your Luxury Home

Salt Lake City is one of the fastest-growing metropolitan areas in the country. With its rich history, outdoor lifestyle, and growing tech and healthcare industry, more people are moving to the area every year.

As demand for housing increases, so do home prices, which has led to a rise in jumbo home loans. Jumbo mortgages are basically loan amounts that exceed the standard conforming loan limits set by the Federal Housing Finance Agency (FHFA).

If you are a potential homebuyer in Salt Lake City or the surrounding areas in Utah, it’s important to understand what jumbo loans are, how they work, and whether they are the right option for you.

Today we will break down the current conforming loan limits in Salt Lake City, explain what qualifies as a jumbo loan, discuss the pros and cons of jumbo loans, and highlight which neighborhoods are more likely to require these types of mortgages. We will also dive into some low-down-payment options, such as the 10% and 5% down piggyback combination loans, which are commonly used in higher-priced markets like Salt Lake City.

Conforming Loan Limits in Salt Lake City

Before we dive into the specifics of jumbo loans, it’s important to understand conforming loan limits. These limits are set by the FHFA, which establishes the maximum loan amounts that are eligible for purchase by government-sponsored entities (GSEs) like Fannie Mae and Freddie Mac. Loans that fall within these limits are considered basic conforming or conventional loans.

As of 2025, the conforming loan limit for a single-family home in Salt Lake County is $806,500 for a basic single unit property. A handful of high-cost counties in Utah are even greater, please find the complete county and multi-unit chart below.  Again, any loan amount that exceeds this threshold is considered a jumbo mortgage.

Jumbo loans are commonly used for purchasing more expensive homes in high-cost areas. In Salt Lake City, with its growing population and increasing demand for housing, more and more buyers are turning to jumbo loans to afford properties that exceed the conforming loan limits.

High Cost Neighborhoods That Might Require Jumbo Financing

Salt Lake City has several neighborhoods where home values can easily exceed the conforming loan limits, making jumbo loans a necessity. Some of the most expensive neighborhoods in the area include:

1. The Avenues

The Avenues is one of Salt Lake City’s most historic and sought-after neighborhoods, known for its Victorian-era homes and stunning views of downtown and the surrounding mountains. Homes in this area can range from $700,000 to well over $2 million, depending on size and location.

2. Federal Heights

Federal Heights is an affluent neighborhood located in the eastern part of Salt Lake City. With its large, luxurious homes and proximity to the University of Utah and downtown, it’s no surprise that properties in this area can easily exceed $1 million.

3. Mount Olympus

Mount Olympus is another upscale neighborhood in the eastern foothills, where homes can range from $1 million to over $3 million. With its panoramic views of the valley and spacious lots, Mount Olympus is one of Salt Lake City’s most desirable addresses.

4. East Bench

The East Bench area offers a mix of luxury homes, modern developments, and mid-century properties. Depending on the location and amenities, homes in this neighborhood can easily reach prices above $1 million.

5. Sugar House

Sugar House is one of the city’s oldest and most charming neighborhoods, with an eclectic mix of historic homes, modern condos, and upscale properties. Homes here often exceed the $1 million mark, especially for properties with unique architectural designs or larger lots.

Low Down Payment Jumbo Mortgages

While jumbo loans typically require a larger down payment (at least 20%), many qualified homebuyers may still be able to secure a loan with a much lower down payment of only 5%.

95% Financing:  Loan limit is $1,350,000 depending on the county. 700 credit score required, primary residence only.

90% Financing: Loan limit is $2,500,000 depending on the county. 680 credit score required, primary or vacation homes.

A piggyback loan involves taking out two separate mortgages to cover the full amount of your home purchase. For example, you could take out a 80% first mortgage (the main loan) and a 15% second mortgage (a piggyback loan) to cover the remaining portion. The benefit of this structure is that you avoid paying for private mortgage insurance (PMI) while still keeping your initial down payment to only 5%.

Piggyback and combo loans can be great options for homebuyers looking to purchase more expensive properties in Salt Lake City without putting down 20% upfront. However, it’s important to note that these loans come with their own set of considerations, such as slightly higher interest rates on the second mortgage.

Pros and Cons of Jumbo Loans

Like any financial product, jumbo loans come with their advantages and disadvantages. Understanding these pros and cons is crucial for homebuyers in who are considering this option.

Pros of Jumbo Loans:

• Higher Loan Amounts: The most significant advantage of a jumbo loan is that it allows you to borrow more money than a conforming loan. This is particularly beneficial in expensive areas like Salt Lake City, where median home prices have been rising steadily in recent years.

• Flexibility in Property Selection: With a jumbo loan, you can purchase a higher-value property, giving you access to a broader selection of homes. In Salt Lake City, there are many upscale neighborhoods where home values can exceed $1 million, making jumbo loans a common choice.

• No Mortgage Insurance: Unlike some high-ratio loans, jumbo loans typically do not require private mortgage insurance (PMI). For conforming loans, PMI is often required if you make a down payment of less than 20%. However, with jumbo loans, you can avoid PMI, which can save you a significant amount of money over time.

• Competitive Interest Rates: While jumbo loans historically came with higher interest rates than conforming loans, the gap has narrowed in recent years. In many cases, jumbo loans offer competitive interest rates, making them a more affordable option for high-income earners.

• Customizable Loan Terms: Jumbo loans often offer more flexibility in terms of repayment and amortization schedules. You may be able to negotiate a term length or other features that suit your financial situation better than a conforming loan.

• Refinancing:  Jumbo rate reduction and cash-out refinance options (90% LTV) are also readily available for homeowners.

Cons of Jumbo Loans:

• Stricter Qualification Requirements: Since jumbo loans are not backed by Fannie Mae or Freddie Mac, lenders take on more risk when issuing them. As a result, they often have stricter requirements, including higher credit scores (usually 680 or above), and more stringent debt-to-income ratio limits.

• Higher Down Payments: While you may be able to get a conforming loan with a 3% to 5% down payment, jumbo loans often require a larger down payment. However, new options are now available that permit up to 95% financing depending on the loan amount requested.

• Fewer Lender Options: Fewer lenders offer jumbo loans compared to conforming loans. As a result, you may have to shop around more extensively to find the best rates and terms. These is especially true when considering low down payment options with 10% or 5% down.

• Risk of Negative Amortization: Certain jumbo loans come with adjustable rates, meaning your interest rate may change over time. This can lead to higher monthly payments if interest rates rise, increasing the risk of negative amortization where you end up owing more than you initially borrowed.

For homebuyers in Salt Lake City, jumbo loans can be a necessary tool for purchasing properties in some of the area’s most desirable neighborhoods. While they offer higher loan amounts and more flexible terms, they also come with stricter qualification requirements. Homebuyers that want to learn more can call, or just submit the Info Request Form below to speak with a specialist 7 days a week.